Low inventories driving Vallejo home prices higher

Home prices in Solano County have risen nearly 22 percent in the past year, though the median home price here still lags behind the rest of the Bay Area, according to recently released industry data.

DataQuick's most recent survey found Solano's median home price rose from $179,750 last January to $219,000 last month. It's the lowest median price in the nine-county Bay Area. Contra Costa's $301,500 is the next lowest median price.

Alameda County's 30.5 percent price hike was the largest and Napa's 14.3 percent, the smallest. But Napa's median price in January was $380,000 and Alameda's was $385,000.

The number of sales also rose in Solano County, as in most of the Bay Area.

The latest data doesn't surprise Solano Association of Realtors president-elect Toni Foster, who said Solano's home price increases have "historically followed the greater Bay Area."

"Home buyers today have a very limited number of homes from which to choose due to the lack of inventory in Solano and throughout the state," she said. "For example, today in Vallejo there are 68 single family homes listed for sale without offers pending. In Benicia, the number is 18. This trend is the primary reason that prices are rising so quickly. The market today is highly competitive for buyers."

Describing today's real estate market as not balanced, Foster said "people are scrambling to get their offer accepted" over those of investors, who find Vallejo is particularly attractive as "the bargain of the Bay Area," and who are able to pay cash.

Solano's numbers put it squarely into what DataQuick officials call a continuing turnaround trend in the Bay Area.

Last month saw the strongest January sales in six years and the 10th consecutive year-over-year increase in the median sale price, they said.

"When we look carefully at underlying trends, it's obvious that the market is still far from normal. The mortgage market is still dysfunctional. Relative sales rates between categories are lopsided. That said, the market imbalances are moving toward normalcy, with baby steps," said John Walsh, DataQuick president.

The median price paid for a home in the nine-county Bay Area was $415,000 in January, DataQuick reported. That was down more than 6 percent from $442,750 in December. It was also up 27.3 percent from $326,000 in January a year ago, the data shows. The winter drop in prices is normal for the season, officials said.

The median Bay Area home price reached a high of $665,000 in June/July 2007, and then fell to a low of $290,000 in March two years later, DataQuick reported. At the median's current rate of increase, it will recover about half of its peak-to-trough loss sometime this spring.

"We kind of got a late start on the rising prices, cause we're coming from a lower bottom," Foster said. "There was a huge glut of foreclosed homes on the market here. At one time there were more than 1,200 homes on the market in Vallejo, and now we're down to 68."

Contact staff writer Rachel Raskin-Zrihen at (707) 553-6824 or rzrihen@timesheraldonline.com. Follow her on Twitter at RachelVTH.